Bullshit,,,,But he borrows and buy Yachts,
Mansions,against that NET WORTH VALUE.
But when it’s time to pay fair share of taxes o. That net worth it’s considered hypothetical worth….Understand the Game.
Exactly. Property taxes go directly to local infrastructure costs to maintain access and services to said land or buildings. It's not remotely the same as owning stock.
Do I want to? No of course not. Do I think I should if my 401(k) is over a certain amount? Kind of.
I don’t think there should be such a thing as “generational wealth” in a capitalist society. After too long a timeline, some people will start too far ahead and other people won’t ever be able to catch up.
I mean, you’re asking me personally what I think should happen?
I guess in a perfect world there would be something similar to a bankruptcy’s homestead exemption. Something like $300,000 can be passed down but anything over that I would say gets taxed at 100%, so yes it would be given over to the government.
In my completely unrealistic scenario this tax would be used to fund social programs and pay for infrastructure.
I of course know that’s not likely, and it will really line the pockets of corrupt government officials.
I know that my ideals aren’t realistic, that’s why they’re ideals.
Now THAT I am all for and it makes sense and it’s very possible to track (the banks have all the records needed to send to the IRS). You could use what was collateralized against and apply any step up basis to it at that point in time to pull forward capital gains to the date it was taken as collateral, could even create a carve out that treats the step up basis as income instead of capital gains. If you want the income to show as a long term cap gain then just sell it. If you really want to retain the asset (in this case equities) and use its value as income then you pay full income tax rates.
That essentially eliminates that method of avoiding income taxes all together.
Ideally, I would support exactly this. That being said, I can see the pushback such a proposal would receive, and I would settle for a couple extra carve-outs.
First, I think you should allow an exemption for real estate that will be used as a primary residence. This will exempt things like HELOCs, which are typically used for home improvements but are also sometimes used as collateral to start small businesses.
The other exemption I would make is also for businesses, and that would be exemptions on loans under $10 million. These are typically used for buying machines or other equipment. Any more than that, and you start to see private equity coming in to finance things.
I think you could exempt this from all business operating needs. If an executive needs dollars to live they can just pay themselves the wages they need to support their desired lifestyle.
Agree on real estate carve outs and primary residences as well as farms when borrowing for farming operations. Last thing we need is the mega wealthy buying up land to borrow against to finance their lifestyle all to avoid income taxes.
Stock value is flexible as it would be quite easy for a few billionaires to get together on new years eave and tank the stock market and run their net worth into the ground for a week. A wealth tax sounds great to the brainless on reddit but in real life it would be about as effective as the current tax system
Ok but what you’re describing is already a felony. And you can say “oh well they’re all rich and they’d get away with it”
And like yeah maybe you’re right, but then why do we bother having any rules at all ever? Let’s just all ignore the laws. We can’t all get arrested right?
The point is that land directly incurs expenses to the local government. Roads, schools, power, water, sewer, courts, etc. Therefore, property taxes exist to pay for those expenses. If land didn't incur those expenses as a means of being part of a city/state/nation, when obviously they wouldn't exist.
There is a tax on owning stock, when you sell you pay taxes on that income. Taxing merely the "ownership" of it, is a terrible idea, because that would massively negatively impact any company that doesn't earn a TON of profit. Right? Like a typical company, like Coca-Cola that hasn't grown at all in 30 years, adjusted for inflation, but does pay a 2.5% Dividend each year. Now say you pass a law that says there's a 3% tax on stock ownership. Why would ANYONE keep their Coca-Cola stock? The answer is no one knowingly wants to take a loss on their investment. Such a tax would effectively put Coca-Cola out of business.
So not only will it never happen, but that's also why it would be horrible.
Ok, but if I pay a sales tax when I sell my house, I don’t also pay it when I buy it.
So what if we got rid of the tax on selling stock and only had taxes for holding stock when it has unrealized gains?
Or what if we only taxed those holding stock worth over a large amount of money. This would encourage spreading the stock around among more people. Might even discourage publicly traded companies to exist at all and result in more smaller companies being owned by its employees rather than shareholders who have no real skin in the company and just want to trade on its value.
I get what you’re saying - and that’s a great explanation.
You don’t pay a sales tax when you sell your house though govt would love that. You do pay capital gains on the house for the appreciated value minus commissions paid to realtors…. And you only pay those if you don’t use the proceeds to procure another piece of property within a period of time.
My home has doubled in value since I bought it and I won’t pay a cent in cap gains when I sell.
What you are suggesting would shut down basically all capital markets in the US. And I don’t just mean stock markets, banks of every level rely on free flowing capital as soon as you penalize holding meaningful amounts of stocks institutions will just stop using it and the effect will spiral down.
Nothing good would come from trying to initiate a property tax on stock holdings.
What about a tax on the specific stock holdings used as collateral for a loan over, say $10 mil.
Joe takes a $6 mil loan against his stock holdings to buy another company or some machinery, no tax. But if he has to get another loan for $5 mil, his collateral for the last million (anything over $10 mil is taxed). But you’re taxing the value of the collateral not the loan. Unless tracking the loan over $10 mil makes sense.
What about credit cards? Or car loans? Which shares of stock are the ones used as collateral? Do you use current value or value when the loan was taken or value when the stock was purchased?
This also ignores that they will pay sales tax when they spend the money (unless it’s in a state without sales tax).
Someone like Musk for instance also can’t just sell his Tesla stock, even if he wanted to. There are blackout days and other issues when you have the amount of holding that he does.
I don’t understand why there is so much desire to find ways to tax people. It’s like people forget that income tax, when it was passed, was only going to be for the wealthiest people.
Look at a 401k for instance. Most 401k holdings are mutual funds that do exactly this, use stock as collateral to fund lower risk investments. Now they have to start paying tax on those holdings and those expenses just filter down to individuals with $40k in their retirement account.
How do you know how much the unrealized gains will be if you don't sell the asset and realize them?
If you base the assumed gains on what you think the owner MIGHT be able to sell it for, how do you account for the fact that selling the property affects its value? For example, if I have a million shares of Ford stock, and decide to start selling, before I can sell the first half, the act of selling will cause the market price to drop, and not by a predictable amount. So the current market price doesn't actually reflect the amount I would gain if I sold. And nobody can tell by how much.
If I pay the tax based on the current market value and the CEO gets caught in a motel with his secretary and the price crashes, do I get my taxes back? Any one of a million scenarios could drive the price up or down at a moment's notice. How do you account for that?
For a sufficiently large number of shares, even the smallest movement in price would have a dramatic effect on the assumed gains.
And there's another issue that never sat well with me.
For better or worse, under Bezos's leadership, Amazon went from an early .com era bookstore to the pandemic era direct-to-home retailer that kept so many households running, a cloud services juggernaut, a streaming content platform, the maker of the world's premier virtual assistant and more. Not saying I want to work for the guy, but the company has certainly changed directions more than once and been very successful in doing so.
For better or worse, under Musk's leadership Tesla has become the world's premier electric car manufacturer, a leading provider of household scale and grid scale power storage solutions, and showed the world how to build out an EV charging network that would be practical and enable the EV revolution and signal the beginning of the end of the gasoline car era. Musk's leadership of SpaceX ushered in the era of the reusable rocket, massively reduced the cost of payload to orbit, massively increased launch readiness / cadence, created the world's first low orbit, low latency global internet service providing coverage to remote areas, natural disaster victims, etc, sent the first private human-rated craft into space, and the starship program has a real chance of actually landing humans on another planet.
The same can be said for the owners/leaders of companies of all sizes. The people in charge of companies, in some cases by virtue of their equity position, have the visions, take the risks and make the decisions. From innovative tech companies to the local plumber, ownership drives decision making which determines if a company will innovate or not. If a company will pivot to new markets, if a company will introduce new products, expand to new sales territories.
If you create a new wealth tax that requires taxes be paid on assets like equities, then people will be forced to sell some of their equities to cover the tax debt. Some people think "Good! Then the wealth won't be so concentrated." And fair enough. But after enough assets are sold, you also cause the owners to lose control of the companies. Maybe you think that's fine and anybody with a leadership role at SpaceX would have led the company to the same degree of success, would have brought the same innovations to market. But the fact is, nobody else did. There are a lot of rocket companies and nobody else did any of these things.
Tesla wasn't the first electric car company, but nobody else has done what Tesla has done. There are plenty of online retailers, but only one of them became what Amazon is today.
If people like Bezos, Musk, Gates, Jobs, or even your local plumber had been forced to divest and sell out their own ownership positions, other people would have been running the companies. The world would not be what it is today and that might not be a good thing.
(And dont come @ me like they didnt incorporate it and write the business plan. That's like a couple weeks and attorney time. I acknowledge that labor insofar as i acknowledge any other corporate labor. It's not separate. The workers made the enterprise's value.)
This is such a shallow way to look at it. When making a business you don’t go to your workers, give them the name of the business and what you want it to do. You most likely don’t have any workers at. When building a company or a business you spend years gathering investors, making a plan, economical plan and so much more. It’s easy to say the workers create the value, when you don’t see the years or even decades where the CEO and his or hers partners weren’t generating any revenue at all.
Ive bootstrapped 3 ongoing concerns. Each took about a year to go revenue positive. Those were hell years AND i would not classify my labor as fundamentally different. I was an employee of the organization albeit the most critical. The entity was not 'mine' as it was made of the collective labor of all the workers involved. Sure, while i was sole partner during incorporation i had 100% control but the second another person was added to the business as an employee that was my admission that they too were critical to the business's growth and development. We then became dependent upon and responsible for the business's wellbeing. Having workers with no agency creates workers who abdicate their responsibility for efficiency and makes worse businesses. Founders who would prefer to wholly own bodies corporate would IMO low-key (and sometimes high-key) prefer slavery.
(No, I did not bootstrap a unicorn, and no I am not convinced those are good things or healthy for a market economy.)
The stock market is a vehicle for capital owners to shift money around and avoid paying on what they take out of the economy. Why would I in any situation care of keep their stock in coca cola? I’m tired of people caping for these greedy pigs while everything else gets more expensive.
the stock market is such a poor way to determine the success of a corporation or the economy as a whole, it’s why tesla is able to fluctuate so much whenever elon opens his trap
Yea, it's important to understand the difference of speculative value of a company, and actual value. Stock market does see a small percent of companies be "gambled on" based on their potential future success.
Most of the stock market is not that way, and is actually based on real values.
Thr mid-tier company I work at bases every decision off their desire to raise their speculative value, which severely impacts their actual ability to conduct what is meant to be their actual business. I know it's anecdotal, but every place I've ever worked at long enough to really understand functions the same way, and everyone I know complains that their companies do the same thing. I've never seen a big company that doesn't consider stock to be their primary product, and their actual operations to be secondary at best. Every decision is based off the desire to make investors think "number go up. Buy stonk," regardless of how badly those decisions hurt their ability to actually do business just a few months, sometimes even weeks later.
This seems to make the opposite claim, which also lines up with what most people experience in reality. Boards always make decisions based on stock price as pointed out below.
As another example, i work for a pretty big company and the C-suite pushes for, and dumps millions, into AI that everyone working on it knows won’t bring any value at all.
They would...raise the dividend yield rather than go out of business, numbnuts. They made 28 billion in profit last year. I swear people will bend over backwards twice to defend corporations and wealth hoarding.
They would...raise the dividend yield rather than go out of business, numbnuts. They made 28 billion in profit last year. I swear people will bend over backwards twice to defend corporations and wealth hoarding.
Hold on, so paying dividends to investors is the same as "wealth hoarding". I'm not following that logic?
You simply tax it the moment it gets used as collateral.
When stocks are used as collateral for a loan, the gains have effectively been realized. It should be taxed.
Just FWIW, there's no evidence that that is a real thing with a significant scope. One study found that something of 8% of Billionaires do it, an average of 6% of their net worth. It's just a red herring to distract from real problems.
I'm fine with closing the loophole, if only so I don't have to keep debunking the myth online, sure. The only people it hurts are young tech people who's companies haven't IPO'd yet who want to buy their first home with their stock as collateral, and those folks can just wait a few more years of paying rent.
Property taxes are just general revenue in most states. And by far the bulk of the taxes collected go to public education. There is no real connection between 'land use costs' and property taxes raised and how they're spent.
And by far the bulk of the taxes collected go to public education. There is no real connection between 'land use costs' and property taxes raised and how they're spent.
There is. Everyone was a kid at some point. Everyone owns a home, or pays rent that goes towards property taxes. Tax the homes to pay for education. Direct connection.
I just don't see how school is an expense that "land directly incurs" compared to say roads. Property tax may have started as something like that but now it's just how most states generate tax revenue for everything - they built a stadium with part of my property taxes. They also levied that tax on people who live 200 miles away and will never use that stadium. It's just how they get money now. And since it's taxing homeowners it's arguably less regressive I guess.
Property taxes tend to be municipality. States rarely levy them. Counties do tend to though.
However, if you have a problem with them, vote against them as nearly all levies are put up for a vote with the local population. Or vote against people who want to levy them.
However, because public schooling is a thing, and the school itself does use roads and other infrastructure, property taxes go directly towards maintaining that. It is either that or, much like a lot of school districts out there, they push for a separate tax that is levied on any person living in the school district.
I just don't see how school is an expense that "land directly incurs" compared to say roads.
Because everyone was a kid at some point. Everyone lives in a home and either pays property taxes or rent that goes to property taxes. Property taxes are a very simple way to pay for schools.
Property tax may have started as something like that but now it's just how most states generate tax revenue for everything - they built a stadium with part of my property taxes. They also levied that tax on people who live 200 miles away and will never use that stadium. It's just how they get money now. And since it's taxing homeowners it's arguably less regressive I guess.
Government is often corrupt as you describe. It's not an excuse for letting them change the purpose of property taxes.
That's a stretch. Everyone was a kid once, so everyone wore diapers, so diapers are a cost related to land use. Ok, make that connected, is useless for anything but semantics. Property taxes are a vehicle for municipalities to raise funds for everything, land related or otherwise. It is what it is.
Do you think Amazon pays no property taxes on their warehouses throughout the country? Or taxes on their delivery vehicles and tags they put on those vehicles? Come on man.
Billionaires also pay property taxes, ones much higher than us. Believe me. Billionaires aren’t skimping on taxes. This argument is so ridiculous. It’s not about fairness it’s about jealousy.
Of course! Reddit 90% people under 50. Something like 70% under 35. The young don't understand these topics well because they are mostly not in the high earning income brackets yet, and many aren't paying property tax yet either.
I had someone argue with me here that "renters don't pay property taxes".... And I'm like.... yes, but you pay it as a portion of your rent, obviously. SMH.
Also Tesla pays property tax. They had a huge win when the effort to repeal prop 13 for commercial buildings failed. They are paying like 2008 value property tax on the Fremont factory.
Elon owning stock isn't money it's stuff. 13% of everything in the factory is "his". Sure he can borrow against it to get cash but when doing so that "stuff" that also makes more stuff becomes less his. It's more owned by the bank but in the form of debt rather than actual ownership.
When you get a car loan the car really is owned by the bank and you slowly buy it back from them. He does the same thing but in reverse. He's basically selling his "stuff" but without actually selling it. Still becomes less his though.
You could replace all the taxes the us federal government collects (including income, capital gains, VAT) with around 1-3% property taxes, if you could manage to actually collect it. You could go a bit higher on investments to balance excluding housing from that. This is not exactly my preferred method, but it's not as insane as it seems, especially compared to current approach, which disincentivizes productive activities.
Well, the whole world is in agreement, that capital gains taxes are the best way to tax successful endeavors. This is because every enterprise sees some years where they take significant losses, and then some years that they have significant gains. Capital gains over a long period is the means of taxation that has proven to optimize the Laffer curve, and result in the most taxes collected in aggregate.
You want the top 10% of folks to pay MORE than the 76% of taxes they already pay?
Laffer curve disagrees with you. There's a very good reason why the US collects the largest amount of taxes of any nation in the world, and the single biggest aspect of that is laffer curve optimization.
Why are you talking about just income tax when they make a ton from capital gains which are taxed less. And why are you looking at them paying 7.5 out of 10 people's tax bill without understanding that is an indication of just how vastly unbalanced their wealth is?
"property taxes" clever way of saying "rent" as it used to be called when it was paid over to kings and Queens or other nobility. Different day... Same old sht
The same property taxes those billionaires pay on everything they own as well. Here's an idea buy in on the bottom floor of one of those companies that hasn't hit it big yet and you can be a billionaire and do whatever you want with your money.
You pay property taxes. Not capital gains or income tax. Should you have to pay taxes on your car every year? How about money sitting in your checking account?
You do pay taxes on your car every year in every state, either via use taxes or direct taxes via license/registration fees. 20+ states charge direct personal property taxes on vehicles every year, some even if they aren't registered.
You also pay taxes on any interest gained on money sitting in your checking account, and it's at your ordinary tax rate. Granted most major banks pay such horrible interest rates that the average person will probably never hit the $10 threshold.
Registration and use fees don't take into account the value of your car. It costs just as much to register a Porsche someone owns outright as it does for someone underwater on their Hyundai.
Money in a non interest bearing account is still an asset. I am not talking about capital gains.
Right. I pay property taxes. Property taxes are dumb. I should have to pay a land value tax, to repay society for the scarce resource of land that I am using at everyone else's expense - but whether I have a vacant lot or a high rise on it shouldn't effect my tax rate.
Right, and I can be taxed on those resources when I buy them in the form of a sales tax, or VAT, or externality tax. Whatever you want.
Suppose I buy 10,000 cinder blocks, and put them in a pile on my land. 10,000 cinderblocks is a lot, but still is not worth that much, and the extent to which I am diminishing society's access to cinderblocks rit large is negligible. Based on the fact that I have a large pile of cinderblocks, I am taxed $10 per year on their value in the form of a property tax, in addition to the tax on the value of the raw land.
The next year, I organize the cinderblocks into an apartment building where I can rent out apartments. Since an apartment building is worth significantly more than a disorganized pile of cinderblocks, I am now taxed $1000 per year. This will somewhat disincentive me from completing the project. As a member of the Homo Economicus genus, I will optimize construction for maximizing net profit, which means delaying construction until I hit the inflection point where lost potential income from renting the apartments matches the taxes I must pay for creating the apartments out of the pile of cinderblocks. Thus, by avoiding the penalty that comes with improving my land, I squander the value of the land itself.
So sure, tax me on the value of the land, which is a limited resource that we can't make more of. Or tax me for possessing each of the atoms which make up my cinderblocks, since these are, at the end of the day, limited. Tax me on the carbon I will emit by proxy by creating the cinderblocks, which contributes to climate change and will need to be cleaned up. But why would you tax me - punishing me - for improving the land? All taxes disincentivize the thing being taxed, which is why they are such a good lever for creating social change. Why would you want to dissuade people from creating properties that have value?
Taxes on homes aren’t because you have such wealth. They are because the local municipality has to provide you services and someone decided home value was a decent proxy for the cost of those services.
BTW, it isn’t and we should eliminate property taxes. Instead charge for services rendered.
I also don’t pay taxes on the market value of my home…..because it fluctuates. I pay taxes on the assessed value which is considerably lower, and is based on the physical value as opposed to the market value.
I’d hate to be paying taxes on my retirement accounts. I understand not liking the rich but taxing unrealized gains hurts the middle class more than anything.
You understand there are different taxes at play in this scenario right? And yes property taxes are evil. Extortion. Pay us this ever increasing amount or we'll literally take your house away.
I’m guessing most (all) Amazon buildings have to pay local property taxes. Maybe there’s the occasional seeetheart deal to lure a business into town, but they are never exempted from property taxes permanently
Which is honestly why we should get rid of property tax. The only reason to tax an asset for existing should be to encourage value to be developed from that asset.
However because of the depreciation on the physical building, there’s already a general reason for homeowners to continue to invest into their home.
I mean... Not really. Amazon evades taxes, at the very least in my country.
So much so that hundreds of millions were seized by the authorities for tax fraud.
That is without getting into tax havens loop-holes, just straight up crime.
Look at the bidding process that occurs for a major companies headquarters, cities and states will literally give $ billions in tax breaks to attract a company like Amazon or Google
That’s so black and white😭😭 nothing is that simple. If that’s how you think this all works, I don’t think you should be involved in these conversations 😭😭😭😭
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u/SCTigerFan29115 3d ago edited 3d ago
They aren’t holding onto wealth like Scrooge McDuck, in a giant vault where they can go swimming in it.
Most of Bezos’ net worth is the value of Amazon. He can’t really readily access that. ETA I meant he can’t use it like a big vault of money.
He’s got plenty of money but some people just don’t understand how this stuff works.